Court orders Cho Yang to liquidate
August 28, 2001
A Korean court has decided to end Cho Yang Shipping's reorganization proceedings and liquidate the company.
The court discontinued the company's reorganization, somewhat similar to a Chapter 11 proceeding in the United States, after "judging that the value is much more anticipated by liquidation of the company than by its continuation and the quantum of outstanding liabilities is too much burden for the company to carry on," according to a letter by Soon Bae, the court-appointed receiver for the company.
He said the court has "cancelled the first interested parties' meeting of August 31, 2001. Accordingly, the company shall be put into the liquidation process in compliance with the corporate law in Korea."
"It is very much regretful that the company is judged unable to be rehabilitated and becomes unable to meet your expectation despite the strenuous efforts that all and every single member of Cho Yang have dedicated," Bae said.
Less than two weeks ago Cho Yang officials were hopeful that a reorganization plan would be presented to creditors at the end of August.
A source said about 200 employees would be laid off, and about two dozen will remain to wind up the company's affairs.
Outstanding liabilities of the company have been estimated by various sources as ranging between $200 million and $350 million worldwide.
Creditors include large container leasing companies, terminal operators, and third-party logistics providers, but also many mom-and-pop trucking companies, container depots and third-party logistics departments.
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